In addition, European Commission spokeswoman Vanessa Mock told Bloomberg BNA Sept. 17 in an email that “ministers agreed on a way forward to progress on the FTT proposal on the basis of the agreed core engine and finding a solution for pension funds.”

Germany, France and other EU countries have been engaged in intensive efforts to sway London-based banks to move some or all of their operations to their respective capitals after Brexit. FTT meetings scheduled in June and July were cancelled over concerns the negotiations might hinder their recruitment efforts.

Despite the Sept. 16 commitment to conduct an analysis on the Brexit threat and to carry on with the FTT negotiations, the work to establish the levy on financial transactions could falter again depending on upcoming elections in Germany. Should the German Social Democratic Party fare as poorly as current pre-election campaign polls suggest, and the party isn’t part of a future German government, Germany could drop out of the FTT talks. A commitment to an EU FTT was a condition the German Social Democratic Party made more than three years ago as part of its coalition agreement with the Angela Merkel-led Christian Democratic Party.

Speaking at the end of 2016, current German Finance Minister Wolfgang Schaeuble insisted that the only way an FTT would work without distorting the EU single market would be if all EU member states participate.

The current FTT negotiations only involve 10 EU member states because a previous EU proposal from the European Commission didn’t get the support of all 28 EU member states. As a result, there was an agreement by the 11 countries to use a special “enhanced cooperation” legislative procedure to get around the normal rules requiring unanimous consent of all 28 EU countries when it comes to tax legislation. The number of countries dropped to 10 after Estonia dropped out.

Core Engine

In October 2016, the 10 EU finance ministers agreed to a “core engine” that will drive the FTT. The four core elements involve the following:

where the taxation of particular products will actually take place;

the taxable amount for derivatives subject to the tax and which types of derivatives will be taxed;

a narrow definition of how to apply the tax for market makers for shares; and

treatment of securities, including taxation of gross transactions.

The 10 EU countries currently involved in the FTT negotiations are: Austria, Belgium, France, Germany, Spain, Portugal, Italy, Greece, Slovenia and Slovakia. In recent months, Slovenia and Belgium have considered pulling out of the talks over concerns the FTT would have negative economic effects that would outweigh any revenue.

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